Holman Jenkins of the WSJ says President Obama will never jeopardize his re-election by hurting the UAW:

“Even a “prepackaged” filing runs too much risk of a judge imposing more “sacrifice” on the UAW than the administration is prepared to tolerate.

GM bondholders understand this: They’ve been intransigent precisely because they calculate the UAW is too important to Democratic electoral politics for Mr. Obama to risk losing control of the reorganization process to a bankruptcy judge.”

What could be and what will be:

“Better than trying to rewrite GM’s business relationships — the job of a bankruptcy judge — Mr. Obama might take up the duties of a president. He might try giving the country a coherent auto policy for a change. He could repeal two fleets so Detroit could build its small cars profitably offshore and tame the UAW monopoly in the process. He could dump CAFE or impose a $5 gasoline tax so at least customers would have a reason to buy the cars Washington is forcing Detroit to build.

None of this will happen. Mr. Obama will be content with incoherent policies that poll well — which means GM, Chrysler and perhaps Ford eventually will need taxpayer subsidies as far as the eye can see — or until a real bankruptcy sometime after November 2012.”

Something tells us Mr. Holman is right about GM, so how beholding is Mr. Obama to the banks? Will there be pain for the banks, who have contributed vast sums to the president’s re-election, as well as to virtually all of Congress?  The answer seems obvious.  But will this approach backfire as a populist backlash starts against GM, AIG and the banks’ bailout bonanza?

FT published its “exclusive interview” with President Obama today.  The interview of the “much like FDR” portrays the President as one who, in comparison to his predecessors, “conveys a degree of pragmatism” and “modulated phrasing” and who has a good chance to succeed in uniting the world at “the most important world economic gathering in decades”:

“Many believe that the G20 summit will prove a vacuous waste of time and that the world economy will continue to be sucked into the recessionary vortex. Mr Obama, however, projects a Zen-like calm towards the emergencies that he faces. If his rescue operations fail to arrest the tide, history may show him to have been too unfazed. If things started to stabilise and improve, Mr Obama could be hailed as the new FDR.”

As we said in a previous post, the proposed program is designed to hide the fact that  the taxpayer is paying for all the losses on the assets and the bank bondholders are unscathed.  But according to this comment by John C. Halasz on James Kwak’s Baseline Scenario coverage of the Geithner plan , it’s even worse.  The comment is  reproduced below (we added the boldface type and did a little editing of it):

Nobel Prize winning, self-described liberal economist Paul Krugman said on his blog Saturday:

“…it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.”

Basically, Dr. Krugman says the banks have to be taken over in a way similar to the way the Swedish did and we did with our S&Ls and that Geithner’s plan will not be accepted. Krugman refers to Yves Smith’s blog in Naked Capitalism:

“The New York Times seems to have the inside skinny on the emerging private public partnership abortion program. And it appears to be consistent with (low) expectations: a lot of bells and whistles to finesse the fact that the government will wind up paying well above market for crappy paper….Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone’s eyes to glaze over.”

It appears we will have to look harder for a thoughtful supporter of this new plan.  We expect Obama’s press secretary, Robert Gibbs to be supportive…if he can quit stammering long enough.  Sadly, this extremely complex “set-up” is intended to whitewash the fact that if assets move off the books of banks under this plan, the taxpayer is going to pay virtually the entire difference between their current market value and the amount the banks are currently carrying them on their books. As Krugman says, “the Obama administration has apparently made the judgment that there would be a public outcry if it announced a straightforward plan along these lines”, so they instead wrap it up in this dribble for camouflage.  Remember too –it’s the taxpayer who pays this difference in Geithner’s plan, private investors really are just window dressing and  bank bond holders remain completely unscathed! We think the Obamunists have just begun to here the public outcry..

In 1932, a popular slogan was “in Hoover we trusted, now we’re busted”.  The Obama Administration wants to characterize the president as FDR, and Bush as Hoover.   But, the change we can believe in is anything but.  An article by a realtor in Orange County before the election anticipated the fall in real estate and perhaps the next Hoover:

“This next president (Obama or McCain, it doesn’t matter) will be equated with Herbert Hoover [] and will be defeated in a landslide in the 2012 election.”

We doubt it will be easy to defeat the Obama handout machine in 2012.  The 1936 re-election of FDR was a landslide due to that administration’s  massive vote buying with wealth transfers.  The same is true today.  However, while it is true that the Obama administration inherited the current mess we are in, it is also true that a slow drip of bailout funds to the banks without addressing the bad assets on their books is “a hope” that  the banks will heal themselves, a hope we can not possibly believe in and one much like Hoover’s.

Obama’s budget has much more to do with redistributing wealth than with economic recovery.  Newt Gingrich on Fox’s Hannity show on Friday, March 13  points out that Obama uses a chart prepared by French socialists on page 11 of his new budget document.  The graph was created by Thomas Piketty and Emmanuel Saez, French economists, rock stars of the intellectual left. From Kenneth Davenport’s blog:

“Their specialty is “earnings inequality” and “wealth concentration” — code words for socialist theory designed to validate confiscatory economic policies. It turns out that Piketty and Saez are for Obama what Arthur Laffer was to Ronald Reagan.”

The chart is reproduced below:

Reuters: Paul Volcker is quoted as saying,

“There are big economic problems behind the financial system too that are going to take longer to work out and you can’t neglect those problems while we’re working on this immediate, continuing crisis in the financial system.”

So… what happened to everything is ok, now and Citi doesn’t need any more infusions…?

Obama, speaking to the nations CEOs on Thursday said the crisis was

“not as bad as we think.”

He goes on to say that what we think is ever changing:

“A smidgen of good news and suddenly everything is doing great.   A little bit of bad news and ‘Ooohh, we’re down on the dumps’”.

So… we are not sure whether the economy is not as bad as we think today, or… is it yesterday?   Lastly all this concern on the economy makes him feel persecuted:

“…I am obviously an object of this constantly varying assessment.”

-poor baby…

Obama calls the NY Times back to say,

“By the time we got here, there already had been an enormous infusion of taxpayer money into the financial system, and the thing I constantly try to emphasize to people is that if coming in the market was doing fine, nobody would be happier than me to stay out of it…. You know, I have more than enough to do without having to worry about the financial system.”

The President agrees that government ownership of banks is socialism, but argues Bush started it and he’s just having to “go along”…increasing the government’s investment several times over in the two months he’s been in office.